I did not attempt to get audio fromt he usb, because in my car installation I wanted the sole N7 usb port to accept 12V/2.1 amps so I don't have to recharge in the house.
I took audio out from the headphone stereo 3.5mm female port, into the AUX in of my Becker 220 CDR factory stereo. Initially, I considered this less than ideal, but I have come to really like this solution.
- I control N7 audio with the physical know on the Becker, which is natural and convenient
- I can switch from the N7 source to the internal Becker FM tuner w/ 1 button
- The Becker sends the N7 audio to the amp in the front trunk without my having to dick around with wiring.

I will be curious to see if you can get usb to work for audio out, especially if you can also accommodate usb charging at the same time.

from what i've read, it's impossible to have the nexus 7 using the usb port for anything while charging - I looked into it as I wanted to run an external usb drive with all my music on it, but whilst you can do it (with root) it wouldn't charge, so not ideal for my car - there was someone on xda looking at it, but I think it's a hardware limitation rather than software

"AlarmDock Connect is the first alarm clock radio for Android that allows you to stream music via USB cable, whilst simultaneously charging your device through the same USB cable. It's the ultimate Android audio accessory and night-time companion for any Android device."

ok, maybe not impossible, just no one has yet managed it - although seems to be a few in the last few days that have modified the kernel to get this working, maybe by the time I get around to buying a tablet, the nexus 7 will be able to do what i want
apparently the issue is that the system can only do host mode or charging.... here is a thread with some folk trying... http://rootzwiki.com/topic/30615-can...simultaneously

sorry, can't edit my posts as every one needs to be approved for some reason....
anyway, just a thought if you use a line out it will require some extra volume control for the system, if you use the headphone socket you can use the volume control on the device

USB audio is possible as of JB, but google didn't compile the drivers. Hopefully someone will soon. Keep an eye on xda-developers, as they are most likely to do it.

I am waiting for a pogo dock to do my Nexus 7 install properly. It should allow charging, audio and USB simultaneously. The upside being that as it is contact docking rather than a plug, it is less likely to become loose with constant plugging.

Using a bluetooth 2.1 receiver at the moment, which is reasonable quality. Not audiophile quality though and the internal DAC on the Tegra chipset is supposed to be rubbish....